The gold market in the UAE has experienced notable activity during the month of Ramadan, with sales reportedly increasing by approximately 15% compared to typical periods, according to traders. This surge is attributed to heightened demand for gifts and jewelry as the Eid al-Fitr season approaches, along with interest from both residents and tourists in purchasing gold as a traditional gift and safe investment. Ramadan generally represents a busy period for gold sales in the country, coinciding with increased consumer spending and promotional offers from retailers.
Amid rising geopolitical tensions and fluctuations in global markets, gold continues to solidify its status as a safe haven for hedging and preserving value. Demand remains strong in the UAE, bolstered by Dubai’s reputation as a global hub for gold trading. Individuals are increasingly leaning towards buying gold bars and coins, with expectations that the price per ounce might rise to around $5,500 within the week and potentially reach $6,000 by year-end.
Safe Haven
Touheed Abdullah, Chairman of the Dubai Gold and Jewelry Group, commented, “Gold sales are performing well despite regional tensions and fluctuations in global markets, as individuals maintain confidence in the yellow metal as a secure investment. Gold remains one of the most important financial assets globally, now ranking as the second most liquid asset after U.S. bonds, which enhances its role in investment portfolios, especially during periods of economic and geopolitical stress.”
He further stated, “Should certain other financial assets face negative margin operations, investment funds and financial institutions may liquidate a portion of their gold reserves to cover obligations; this reflects gold’s strength as an asset capable of converting to liquidity swiftly and efficiently. This is a key factor in making gold a preferred choice for investors and financial institutions alike.”
Jewelry Without Stones
Regarding consumer demand, Abdullah noted that gold items without gemstones top the list of most sought-after products among buyers because of their direct investment value compared to those with stones. Additionally, there has been a significant increase in demand for gold bars recently, making them one of the most attractive products for investors, especially as individuals shift towards saving and long-term investing.
Forecasts suggest that gold prices could range between $5,000 and $5,300 per ounce this week, with predictions of reaching $6,000 by year-end amid ongoing geopolitical market fluctuations. Despite these volatilities, estimates indicate that prices will likely remain high, supported by robust global demand and the trend of investors turning to gold as a hedge against inflation and currency fluctuations.
Price Stability
Ahmed Anezan, a financial market expert specializing in gold and precious metals, believes that gold continues to affirm its role as a leading safe haven amidst increasing regional geopolitical tensions and prevailing uncertainty in the global economic landscape. However, he noted that gold prices have not experienced sharp increases so far, as markets remain vigilant to assess the actual impact of potential disruptions on energy supplies.
Anezan explains, “Gold does not directly price in tensions or wars but focuses on their economic ramifications, particularly regarding their effects on energy markets, and consequently on global inflation rates. Thus, any significant disruption in oil supplies or global logistics could cause gold prices to move more significantly in the coming period.”
In the UAE, gold demand remains high, according to Anezan, from both individual investors and savers looking to protect their assets against inflation. He remarked that surplus supply in the market due to disruptions in some transport channels has contributed to increasing gold availability, particularly in Dubai, a major global hub for gold import and re-export.
Anezan elaborated that gold demand typically divides into two main segments: the investment and savings segment, favoring gold bars and coins due to lower production costs and ease of resale, along with tax advantages compared to jewelry. The second segment is the consumer segment linked to jewelry purchases, which typically sees a rise in demand during certain seasons, including Ramadan.
Currently, demand is skewed in favor of gold bars and coins, ranging from 9% to 15% compared to jewelry, according to traders and gold shops. Long-term trends for gold remain positive, influenced by central banks globally increasing their gold reserves and rising levels of global debt, as well as potential market pricing of consequences related to possible energy supply disruptions considering the Gulf region produces about a third of the world’s oil.
Anezan added that gold is expected to experience some price fluctuations in the current period due to several factors, including dollar strength and anticipated interest rate changes, alongside geopolitical developments. Estimates suggest that gold may reach about $5,800 within the next few weeks as markets start pricing in the economic impacts of the ongoing regional conflicts and pending official reports on associated costs. In the long run, gold could close above $6,200 before the year’s end, even if tensions diminish, due to persistent structural factors supporting rising global prices.
The UAE’s Appeal
In conclusion, Farah Yazbek, a jewelry expert and designer, stated, “The UAE market has seen stable demand for gold recently, driven by interest from both investors and individuals, especially amid fluctuating financial markets and rising global inflation rates. Gold is increasingly viewed as a long-term investment asset rather than solely a consumer product associated with jewelry. Moreover, Dubai’s position as a global gold trading hub enhances the UAE market’s attractiveness, with the city being one of the key gateways for gold trade in the region and worldwide, benefiting from advanced infrastructure and an open business environment, alongside its pivotal role in the trade and re-export of gold to regional and international markets.”
Regarding which gold products are currently the best sellers in the market—jewelry, coins, or bars—Yazbek stated, “Gold bars and coins are currently leading the list of most sought-after products, especially among investors aiming to diversify their portfolios and bolster secure assets, with demand for this product category increasing by about 15% during Ramadan, according to trader estimates. However, gold jewelry continues to hold its place in the market, although demand has been slightly affected by rising global gold prices, with expectations indicating a global drop of about 8% in demand for jewelry items. Nevertheless, jewelry remains a fundamental choice for consumers, particularly during seasonal events like Ramadan and holidays, when there is typically an uptick in gold jewelry purchases.”
She added, “Forecasts indicate that gold prices will likely continue to move within elevated ranges in the upcoming period, driven by numerous economic and geopolitical factors, including ongoing global tensions, central banks increasing their gold reserves, and sustained investment demand for the yellow metal. These factors may lead gold prices to reach new record levels this year, with some estimates predicting the price per ounce could hit around $6,000 if conditions supporting investment demand persist.”